Standard & Poor’s raised Ireland‘s credit rating by one notch to ‘A+’ on Friday, its third upgrade in 12 months for the European Union’s fastest-growing economy, rewarding it for cutting its debt pile and budget deficit faster than expected.
Standard & Poor’s were the first of the three major agencies to hand Ireland back its ‘A’ rating last June and upgraded again in December. Moody’s is the only one of the three not to give it an ‘A’.
In a statement, S&P said the driver of the latest upgrade was gross domestic product growth of 4.8 percent last year, more than five times the eurozone average of 0.9 percent, and said it expected annual growth of 3.6 percent over the next three years.
It said it saw unemployment falling from 9.8 percent to 7.5 percent by 2017 and wages to grow by around 3 percent in the coming year. Net general government debt will fall to 85 percent by 2018, it said.
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“The upgrade reflects our view of Ireland’s improved fiscal performance, higher state asset sales, and robust economic performance, which have combined to lead to a quicker decline in net general government debt than we had previously forecast,” S&P said in a statement.
Ireland’s debt agency said in a separate statement that the move would “broaden the universe of buyers for Irish Government bonds.”
Dublin can now borrow from debt markets at close to record low rates, selling 1 billion euros of 30-year debt at 1.30 percent in March, although bond yields across the euro zone have climbed since.
S&P said, however, that its model assumed the next government after elections due in early 2016 would not deviate significantly from fiscal targets and it said it expected some fiscal slippage before the vote.